CIAO DATE: 11/04

Europeanization vs. National Autonomy in Health?

Christa Altenstetter
Professor of Political Science, Graduate Center

Occasional Paper Series No. 42

City University of New York

March 1, 2001

European Union Studies Center

It is a pleasure for me to speak about Europeanization and national autonomy in health affairs in the lecture series sponsored by the European Union Studies Center of the Graduate School of The City University of New York and the European Union Center of New York. I welcome this opportunity, as I believe, health matters have not yet been on the agenda of this lecture series.

I start from one premise. I assume that most persons in the audience are not specialists in healthcare systems or European health affairs. I thought that for this audience it may be more interesting if I addressed the evolution, the meaning and the shifting balance between European market integration and the member states in the health policy sector. I could have chosen to report on my current research project on patient and product safety of medical goods and how the three largest and most populous member states (France, Germany and the UK) are complying with, and adapting to European Union regulatory requirements in this highly specialized policy sector.

If I were asked why anyone should listen to my talk when the member states have repeatedly refused to include health care and social security in the category of policy areas that can be decided upon by qualified majority voting, at first, I would be hard pressed to make a case that I have a topic to talk about. Clearly, the 15 member states of the European Union have not signed away their sovereign rights in medical care. Article 152 (5) of the latest Treaty revision, the Treaty of Amsterdam, explicitly states that the member states retain control over Athe organization and delivery of healthcare.

Today's topic tough makes for a great topic because of its many puzzles and paradoxes which I cannot all explain today.

Political scientists and European integration specialists have not been interested in health issues. They are not very different from the general public. Health issues make the headlines only when a crisis erupts that attracts our attention. In this context, I am thinking, for example, of the scandal about contaminated blood in the mid-1980s, the current crisis about mad cow disease, and now the foot-and-mouth disease in England. Last week German newspapers reported that experts had identified animals with tuberculosis in Bavaria.

The European food safety crisis is real. Perhaps it is nature's revenge for humans having meddled too much in nature's processes for or without profit.

Europeans get worked up over genetically modified food, hormone-treated beef, etc. [1] We in the US are sitting on the other side of this controversy. But with more organically grown food showing up on the shelves of our supermarkets, something tells me that we may observe the beginnings of a change of heart among the American public.[2]

Health issues make the headlines also when our patience with the promises of managed care wears thin and we are refused proper treatment, or when a new drug discovery raises enormous expectations one day only to be smashed the next day.

This brings me directly to the domestic side of today's topic. In each member state, the health sector is an important economic sector in terms of employment, resources and public spending on health care. In the OECD countries public spending for healthcare amounts to between 7 and 15 percent of GDP, depending on the country, with the US ranked as the top spender. At the same time, the health sector is the most regulated sector in the national economy and always has been and will continue to be. [3]

The healthcare industries are powerful and rich in resources independent of whether we talk about the pharmaceutical and bio-technology industry, the medical goods and equipment industry, and the diagnostics industry, the new information technology or the use of computers for billing, accounting, record keeping or managing patients, hospitals, bio-medical research, etc.

For the last two decades, all European countries have attempted to reform their health care system in order to contain ever rising healthcare costs by introducing competitive elements into the delivery of medical care. Despite these changes, the balance of power has not yet shifted away from public-sector institutions toward private-sector institutions. Of course, there are always exceptions to the rule, and these vary from country to country. Healthcare systems remain firmly in the control of governments--whether national or regional, and it is still accurate to say that when social security, health care, education and labor-related issues are at stake, the mechanisms of domestic politics take over.

THE BIG PICTURE

I. Let me step back and anchor today's topic in a larger picture of developments. To disentangle the large picture is analytically not easy because several transformations are going on at the same time generating their own dynamics, sometimes contradictions, and simultaneously spilling over into the international and the domestic arena.

Time does not permit to disentangle the variables the causal connections which impact upon the speed and intensity of on-going changes. I will treat them as open-ended and contingent upon developments specific to each health issue, policy and economic sector, and country.

Clearly, the topic for today implies European and international dimensions with the latter having been established for quite some time.

More importantly, a right to health care, as Europeans have understood such a right, has been institutionalized at the international, transnational, national as well as regional levels, as the next matrix on Right to healthcare: access to services and facilities in select European countries will show.

Transparency: Right to health care: access to services and facilities

Other illustrations with an international scope are the recent trade disputes over hormone-treated beef, genetically modified foods, and anti-retroviral drugs which have created tensions between the EU and the US. There are tensions between national public health policies and the requirement to comply with trade agreements overseen by the World Trade Organization. Even the BSE or mad cow crisis, which currently is an intra-EU topic, could easily become an international issue.

In addition, the New Transatlantic Agenda in its four-point program includes health and disease issues among the global challenges which require joint solutions between the United States and the European Union. [4]

I do not intend to review domestic developments in detail, but I wish to draw your attention to five kinds of transformations which have revolutionized the delivery of medical services everywhere and which explicitly and implicitly have a strong bearing on today's topic. Some transformations are international, others European, and most are national and local.

The first transformation refers to international market integration and the consolidation of pharmaceutical and medical goods and services. In consequence, we see a weakening of national autonomyBnot an elimination- of national powers over these two policy and economic sectors. In the pharmaceutical and medical device industries international market integration is not a new phenomenon, but the integration of markets has accelerated during the last decade. In my current research area, the medical device sector, 1998 was the year of consolidation through mergers and acquisitions.

The second transformation that all advanced industrialized societies are experiencing is an aging society with special healthcare needs and requirements for medical goods and services.

The third transformation are the dramatic and revolutionary technological and medical innovations over the last two decades. To give just one example. Total hip replacement was initiated in the 1960. Ten years later it revolutionized the treatment of hip arthritis in elderly patients; in the last decade it was knee replacements (which promise a longer survival rate than hip replacements).

The fourth transformation all European and advanced societies are experiencing, which I have mentioned before, results from extensive domestic health care reform over the last two decades; and, finally,

Fifth, we witness an epidemiological transformation which has made communicable disease surveillance not only a European but also an international issue.[5]

These transformations have invariably been shown to come into play in European integration. Let me turn to the powers of the EU in the health sector.

EU POWERS IN THE HEALTH SECTOR

Historically, EU powers in health were extremely limited being related to the free movement of workers, goods and services in the European Community. Until the early 1990s when single-market legislation became the engine of change that drove the process of Europeanization, this has been the framework for health affairs.

After the ratification of the Maastricht Treaty in 1992, we need to distinguish between two separate but highly interrelated policy areas: public health and healthcare policies. The concepts public health and healthcare policies in themselves are elusive concepts. Walter Holland, a London-based well known epidemiologist and his team have defined: Apublic health [as] the science and art of preventing disease, prolonging life and promoting health through the organizational efforts of society. (See footnote 7, p.8). We need to distinguish between

a) public health (in an old and new incarnation) introduced by the Treaty of Maastricht in 1992 and amplified in the Treaty of Amsterdam of 1997) and b) healthcare or medical care policies defined as Athe science and art of diagnosing, treating and curing disease. A Within this group, we distinguish between

b) disease-related intervention programs and healthcare delivery and healthcare systems.

The number of articles relevant for health has increased. This seems to confirm the thesis that the treaty system has become a constitutionalized[6] but this debate is also very controversial.

Article Provision

3(0) Stipulates that the Community will contribute to the attainment of a high level of health protection for its citizens

3(s) Defines that one of the objectives of the Community should be to contribute to the strengthening of consumer protection

30 Prohibits quantitative import restrictions between Member States

34 Prohibits quantitative export restrictions between Member States

36 Permits restrictions on imports and all measures having equivalent effect on grounds of the protection of health and life of humans, animals or plants

43 Agriculture

48-51 Free movement of workers

52-58 Rights of establishment

59-66 Free movement of services including insurance

75(1) The need to introduce measures to improve transport safety

100-102 The approximation of laws related to the single market

118 Prevention of occupational accidents and diseases and occupational hygiene

129 Public health

129a Consumer Protection

130-130q Research

130r (130r-130 of Title XVI Environment and protection of human health

117-125 Related to social provisions and the setting of a Social Fund

130a-130e Economic and social cohesion; the Protocol on social policy; and the Agreement on social policy (except the United Kingdom)

130u Fostering economic and social development of the developing countries [7]

SOURCES OF LEGITIMATION

Drawing on these articles, we can summarize the four sources of legitimation that guide political action in the European Union:

• Decision-making authority is rooted in the single market context;

• Decision-making authority is rooted in a European public health framework (requiring unanimity among the member states; [8]

• Health issues result from other EU legislation and in particular secondary law;

• and, finally, decision-making authority is embedded in national jurisdiction or subsidiarity.

Transparency: Public Health and the European Union: Selected Issues

What do these powers really mean? Despite the flowery wording of Article 152 (ex 129) of the Treaty of Amsterdam of 1997, the powers of the EU in public health and healthcare policies are not as developed as EU powers in other areas. They are weak and the member states have no political will to change this situation.

The recent initiatives of the Prodi Commission to bring public health, consumer protection, animal and plant health, inspection and scientific advice under one umbrella by creating a new Health and Consumer Protection Department has raised great expectations for public health. But these initiatives are running into severe political difficulties because of the insistence by the member states to keep control over health matters. Domestically, the two political rivals are the ministries of health and agriculture, with the treasury in some member states having the upper hand. The allocation of responsibilities to particular ministries greatly varies in the member states depending on the issues involved. It is too early to say whether the current food crisis will become a catalyst for organizational and political changes which would not be possible without the current crisis.

Three testimonies by insiders describe the dilemma of European politics and policy-making in the health sector. Graham Chambers from the research arm of the European Parliament asked How does the white rabbit of health survive in the jungle of savage beasts such as agriculture and industry? [9] Paul Becher, a senior editorial advisor to the London-based European Observatory for Health, jokingly suggested that David Byrne has swapped his appointed role as Health and Consumer Protection Commissioner to become Commissioner for Food Safety. [10] Given the BSE and food safety crises, his assessment is credible. Carolyn Jackson, Chair of the European Parliament's Committee on Environment, Pubic Health and Consumer Policy's busy committee is quoted as having said: [Public health efforts are] Aall excellent aims. But they are meaningless if they are not backed up by concrete action. In particular, the Commission will need to come up with specific, realistic proposals based on clearly defined targets, time scales, methods and strategies." [11]

Transparency: Overview of Health-related projects (1995)

How did all these issues get on the agenda of individual Commission Directorates? While I have not analyzed each issue-area in detail, I am following the observations of insiders and outsiders who have written extensively about the Constitutional Order of the European Union. [12]

To summarize, policy development and implementation of health issues has not proceeded from one single source. Like decisions in other areas, they are the result of decisions by the Council and the Court, and the initiatives by the Commission. They are by-products of decision in another policy sector (i.e. single market policy and trade policy). Some are Treaty-based powers, others derive from consensus-based powers in the Council. Some programs are due to the policy entrepreneurship of the Commission. Many are very issue-specific and a good many are simply Aad-hoc compromises. This patchwork of projects has grown in sheer numbers and has broadened and deepened in substance. Yet, one key problem remains: most EU powers in public health and healthcare policies are overlaid with numerous subsidiarity clauses. This leaves the interplay between Europeanizing and nationalizing forces permanently as shifting and subject to controversies and political conflicts.

Given this characterization of a piecemeal development of EU powers in this field, we cannot speak that one single pattern of Europeanization has emerged that followed the same sequence. EU institutions responded to challenges to health as threats to health have arisen. However, the inclusion of a separate article on public health and consumer protection in the Treaty of Maastricht should be considered of historical importance constituting a critical juncture in the process of Europeanizing health affairs.

Policy advocates and different stakeholders are putting further pressure on European policymakers, in particular the European Parliament, to address health and consumer issues more aggressively and explicitly. These advocates include environmental and consumer groups, but also business, notably commercial health insurance and the pharmaceutical and the medical goods industry.

In summary, three engines of change are driving the process of Europeanization in public health and healthcare policies in the European Union.

• Europeanization, itself a result of globalization, is driven by the forces and pressures of a global economy. The single European market is unthinkable without the process of globalization. The objective of single market legislation has been the promotion of trade. Public health issues and patient safety have come into the picture much later, say around the early and mid-1990's. The changes which we observe in the pharmaceutical and the medical device sector are all embedded in the EU's jurisdiction over the single European market.

• Europeanization is also driven by an inability of governments to deal with cross-border issues of health and disease; in consequence, member-states have agreed that certain health issues should be dealt with at the EU-level such as public health, communicable disease surveillance, bio-medical and disease-related research, etc.

• As we saw earlier, Europeanization also results from a direct transfer of jurisdiction in public health and consumer protection in the catalogue of treaty-based powers initiated by the Maastricht Treaty of 1992, and amplified in the Treaty of Amsterdam of 1997.

The connection between Europeanization and health affairs needs further elaboration.

THE EUROPEAN COURT OF JUSTICE

The Europeanization of health affairs has also resulted from judicial policy-making. I am referring not only to the classic cases ruled by the European Court of Justice which opened up the borders for trans-border trade such as Cassis de Dijon and other single market rulings but to recent landmark cases specific to health which were handed down in 1999 and 2000.

According to a recent study of the European Health Management Association, more than 250 regulations, directives, recommendations and rulings referring directly to health care have been introduced since 1958. One third of them originated from the European Court of Justice.[13]

Reading French, English and German newspapers tells me that governments are not only worried and alarmed" [14] but also opposed to further Court rulings in the health field but so far without success. In my view, the Court's rulings are the engine tilting the balance towards more EU involvement in health matters in the future.[15]

As a test of the approach advocated by the European Court of Justice, a good gauge would be what happens next when the Director on Enterprise, as the former DG III Industry was called, departs from the position which the European Commission has been taken all along and in particular in 1997 when a major controversy arose in this sector. Then, the division within DG III with responsibility for medical devices assured the relevant stakeholder communities payers, the industries concerned and national policy-makers-that it was not going to submit pricing and reimbursement issues for clarification to the Court. In most European countries doctors and hospitals are reimbursed for their services, according to some kind of national or regional fee schedule.

The industry has always argued that national fee schedules constitute barriers to trade. Prices for drugs, medical equipment and patients' supporting aids are set administratively by the major payers of health care. In some countries it is the treasury and/or the ministry of health that set the final price for the products reimbursed by the national insurers.. The medical device industry is quite worried about the British and French approach, now also endorsed by the Germans since January 1, 2000, which requires the evaluation of healthcare technologies as a precondition for market approval and indirectly reimbursement by national health insurers. If manufacturers (and indirectly clinicians) cannot document an added value of a medical product when compared to existing medical and surgical goods and services, national health schemes will not cover and reimburse them.

Some argue that evaluation of healthcare technologies is delaying, and worse, Alocking in medical innovation. Others argue that these measures are in the interest of the public, while still others argue that European countries can no longer afford to cover any new medical or surgical procedure that comes along. The prior evaluation of healthcare technologies is absolutely necessary, so they argue. Clearly, this issue illustrates how the interface between market integration and the delivery of health care in communities is intimate. [16]

HEALTH-CARE SPECIFIC RULINGS

In the last two years, the European Court of Justice handed down a few landmark rulings specific to healthcareBnot public health. In the first case a man who had a prescription for eyeglasses bought them in Belgium, submitted the invoice for reimbursement to his insurance fund and was turned down. He took his case to the European Court of Justice which upheld the view that refusing reimbursement violated the Treaty of Rome concerning the free movement of goods. The second case involved a Luxembourg man who tried to get orthodontic treatment for his daughter in Germany. The insurance fund refused reimbursement arguing that treatment was not urgent and appropriate treatment was available in Luxembourg. He took his case to the European Court, and won. The Court ruled that economic issues cannot justify obstructing the free movement of services. [17]

The Luxembourg authority based its decision on a 1971 EU regulation Nr. 1408 which requires prior authorization from a patient's national healthcare insurer. The member states have considered prior authorization as an essential tool to maintain control over the health care system. The reactions to this ruling was quite strong in several member states, notably in Germany. Prior authorization no longer is necessary. Whether shopping for cross border healthcare is worth while for consumers, the future will tell. In some neighboring countries healthcare services and goods are cheaper, not subject to rationing and covered by a national healthcare insurer in one member state but not in others. Where cross border movement of patients happens already, it goes on in the regions of the original six founders of the European Community.

Researchers from the London School of Economics report on enormous price differentials for prescription drugs. Drug prices are said to be often twice as high in the UK as in continental European countries.

The third ruling of the ECJ has implications for all Europeans holding private or commercial insurance or those who pay for medical services out of pocket.[18] On October 3 of last year, the Court ruled that the price for hospitalization must be the same for all Europeans independent of how they pay for services through public or commercial insurance or out of pocket payments.[19] Mrs. Ferlini, a foreigner and married to an EU official who worked and resided in Luxembourg, gave birth in a hospital in Luxembourg. In the case before the Court the charge for hospitalization was 71.4% higher than it would have been for a native of Luxembourg covered by the Luxembourg health insurance scheme. The Ferlinis were covered by the EU's health plan. Under normal circumstances, a contract or agreement between the EU plan and doctors and hospitals would have existed. But this was not true in this case. The Court reasoned that Art.12 (ex 6) of the Treaty of Rome, as amended, prohibits any discrimination based on nationality.

In a fourth case, ruled on October 5, 2000, the Court has practically undone all public health efforts to ban tobacco advertisement which has been part of the overall cancer and tobacco control strategy initiated by the AEurope against cancer program adopted in 1987. Seven member states (F, IRL, I, P, FIN, and S) had adopted advertising bans and three more countries had notified the Commission that they were going to transpose the provisions of the Directive on tobacco advertising adopted in July 1998. The Kohl government begged to differ on legal grounds and announced that it was going to challenge the directive in order to test a point of law insisting that boundaries between European law and subsidiarity can and must be drawn. When the Schroeder government came to power, at first it wanted to withdraw the case but then decided to go ahead. Several UK tobacco firms joined the German government. The Court ruled in favor of the tobacco industry and against public health.

Earlier this year, Germany announced that the next Intergovernmental Conference needs to address the crazy quilt of EU powers which have grown helter skelter and often without a precise legal basis. The issue of EU powers vs. subsidiarity is bound to spark passionate debates which will show how sensitive this issue is and how difficult it will be to draw such boundaries. My guess is that Europeanization de jure and de facto will always mean different things.

Time has come to bring this talk to an end. One things is clear: political debates, speeches and rhetoric about European integration usually run too far ahead of the more realistic possibilities on the ground. Market integration in the pharmaceutical and medical goods sector will entail concentration of health-related powers at the EU level. However, rapid market integration also raises the costs of national adaptations to European regulations in these two sectors. This is true in particular in countries which have had little tradition in regulating medical goods. In turn, healthcare is likely to remain firmly rooted in domestic policies and practices, and will continue to do so in the future. In fields which are perceived to be highly technical and scientific, the problem of a gap between policy intentions and their realization is compounded. But I ask you, are reimbursement, quality or safety issues of medical and surgical instruments which are used in our patient care not fundamentally political issues? For example, I do not consider the translation of European guidelines for the manufacture of high quality medical goods from English into other languages a technical issue. When instructions for use, labeling, and the advertisement of medical products or prescription drugs are misleading, unclear or written only in English, the safety of patients and users are at stake. So it should not come as a surprise that all member states in the interest of public health have used their authority and insisted that labels and instructions for use must be written in the native language regardless of the complaints by the industry.

In the future we should anticipate:

• pan-European insurance organizations offering their services,

• more cross border shopping for healthcare services and goods, and

• above all, increasing demands for information on available medical procedures and cures

• and demands for more transparency in the pricing and reimbursement of prescription drugs and medical goods and services.

Although I have deliberately not dealt with theoretical aspects of European integration, I wish to offer two brief observations. First, the two dominant interpretationsBneofunctionalism and intergovernmentalism-- work for health as they do for other policy areas, but in the health field, intergovernmentalism seems to offer the more convincing explanation. However, to the extent that the two theories focus on the EU as a governance system and the process of European integrationB they fail to explain policy development in distinct issue-areas such as public health and healthcare policies. A third explanation, which argues that member states made ad hoc compromises as they went along over the last ten years, is more credible.

The second thing I wish to say is that we need to treat the relations between EU institutions and the member states as highly variable depending on the economic and policy sector and it is unlikely that they have followed the same path. To give you just one example, the regulation of pharmaceuticals substantially differs from the regulation of medical goods with the former having started some 30 years ago and the latter having started only in the early 1990s.

There are many challenging dissertation topics in the field of European integration and policy development.

I have come to the end of my talk. Thank you very much for your attention.

Endnotes:

[1] David Barling, Tim Lang. "European Public Policy on genetic modification of agricultural products and food. Lessons to be learned over balancing public health, consumer confidence and commerce." European Journal of Public Health, 1999, 9 (3): 163-165

[2] Tony Judt, Op-Ed, New York Times of February 6, 2001 "Europe is One Until Disaster Strikes," (Remarque Institute of NYU), p. A19.

[3] Richard B. Saltman, Reinhard Busse and Elias Mossialos, Regulating Entrepreneurial Behaviour in European Health Care (For: European Observatory on Health Care System), Copenhagen: Draft, 2000.

[4] The New Transatlantic Agenda (program).

[5] Weinberg, Julius, Olivier Grimaud, Lisa Newton, On Behalf of the Charter Group, "Establishing priorities for European collaboration in communicable disease surveillance." European Journal of Public Health, 1999:9(3):236-240.

[6] Sweet, A.S. and Th.L. Brunell 1998. "Constructing a Supranational Constitution: Dispute Resolution and Governance in the European Community." APSR. 92(1) pp. 63-81.

[7] Elias Mossialos and Govin Permanand. "Public Health in the European Union: Making it Relavant." Discussion Paper No. 17. London: The London School of Economics and Political Science.

[8] The European Court of Justice confirmed this requirement in its latest rulings of October 5, 2000. The Court argued that the Commission used an inappropriate legal basis for the directive on the tobaco ban. http://www.eurunion.org/news.eurecom/2000/eurecom1000.htm

[9] eurohealth, vol. 5, No. 4, Winter 1999, p.8.; European Parliament. Directorate General for Research. Working Document. "European Union Health Policy on the Eve of the Millennium." Public Health and Consumer Protection Series. SACO102 EN. 9-1998. Author: Lyndsay Mountford. Editor: Graham Chambers.

[10] eurohealth, vol. 6, no. 1, Spring 2000, p.1.

[11] eurohealth, vol. 6, no. 1, Spring 2000, p.1.

[12] Youri Devuyst. "The European Union's Constitutional Order? Between Community Method and Ad Hoc Compromise," Berkley Journal of International Law. Vol. 18, No. 1, 1999, pp. 1-52; see also John Peterson and Elizabeth Bomberg, Decision-making in the European Union. New York: St. Martin's Press, 1999.

[13] eurohealth, vol. 6, no. 4, Autumn 2000, p.8.

[14] Kanavos and McKee, BMJ, 1999:318:1157-1158.

[15] For the EU as a whole, Youri Devuyst reports that "in 1999, the Commission on its own enacted 842 regulations, 55 directives and 516 decisions in application of the Treaties or of the EU's secondary legislation," p.11; for the reference see footnote 12.

[16] Reiner Leidl (ed.). Health Care and Its Financing in the Single European Market. Amsterdam: IOS Press, 1998.

[17] Panos Kanavos and Martin McKee, Editorial in BMJ 1999:318-1157-1158, May 1.

[18] Ferlini C411/98, October 3, 2000

[19] PKV Publik, 15.12.2000, Nr. 9/00, p. 104. "EuGH will gleichen Preis fuer gleichen Preis."